Federal prosecutors in New York, along with the SEC, are investigating Digital Currency Group (DCG) for internal transfers at its lending subsidiary Genesis, Bloomberg reported on Friday.
DCG has received requests for documents and interviews by prosecutors in the Eastern District of New York, the report states, citing people familiar with the investigation. The SEC is also separately investigating DCG, according to an unnamed source who spoke with Bloomberg.
Aside from Genesis, DCG is the parent company of crypto news site CoinDesk, cryptocurrency exchange Luno, and crypto-mining service provider Foundry Digital. DCG did not respond immediately to requests for comment.
By the time FTX had gone under, Genesis had already been burned by the implosion of crypto hedge fund Three Arrows Capital (3AC). Documents from the hedge fund’s liquidation in July revealed 3AC had received a $2.36 billion loan from Genesis Global Trading, the brokerage unit of Genesis.
Genesis Global Trading filed a claim against 3AC for $1.2 billion, which was assumed by its parent company, according to CoinDesk. The move resulted in a $1.1 billion promissory note due to DCG in 2023, Bloomberg reported.
Recently, Genesis has been under fire from cryptocurrency exchange Gemini. The crypto lender owes $900 million to Gemini Earn, a high-yield lending product that’s native to the Winklevoss twins’ exchange.
Gemini co-founder Cameron Winklevoss recently accused Silbert of “bad faith stall tactics” as the exchange works to get its money back.
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